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Survey: Rating Action: Moody's Assigns B2 Rating to ProFrac's Delayed Drawn Tam Loan

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NEW YORK, August 5, 2022 — Moody’s Investors Service (“Moody’s”) has assigned a B2 rating to ProFrac Holdings II, LLC’s (ProFrac) delayed draw term loan (DDTL). ProFrac’s other ratings, including a B2 Corporate Family Rating (CFR), a B2 senior secured term loan rating, and a stable outlook remain unchanged.

The company amended the term loan agreement, increasing the term loan facility by $150 million and providing DDTL. DDTL will continue to do so (i) until the completion of the previously disclosed agreement for ProFrac to acquire US Well Services (USWS) and (ii) March 31, 2023.

Proceeds from the add-on term loan were used to finance the previously disclosed approximately $90 million acquisition of Monahan’s LLC’s sand business SP Silica and SP Silica Sales LLC (together, Monahan’s). The operating funds will be used to facilitate the proposed acquisition of USWS, pay the company’s outstanding debt under his ABL credit facility, and for general corporate purposes.

The following evaluation actions were performed:


..Published by: ProFrac Holdings II, LLC

…. Gtd. Late Draw Term Loan with Priority Guarantee, Designation B2 (LGD4)

Basis for evaluation

ProFrac’s existing Senior Secured Term Loan and Add-On Term Loan (together $452 million outstanding at closing of the Add-On Term Loan transaction) maturing in March 2025 are rated B2, the same as the CFR. I’m here. DDTL are rated B2 because once drawn they are part of the same debt class as term loans. Term loans and DDTLs have a first lien on all assets of the borrower and guarantor, including subsidiaries. However, ABL collateral has a second priority lien. His ABL Revolving Credit Facility of $200 million will mature in his March 2027, providing a first lien on all working capital assets of the borrower (ABL collateral) and all other assets of the borrower and guarantor. has a second lien on ABL will claim priority over more liquid collateral, but the size of his ABL facility for term loans and his DDTL will not be a notch down for term loans from B2 CFR. However, if the company expands his ABL on a committed basis, it could put pressure on the Term Loan and DDTL ratings. The company also has an initial financial loan of $24 million due in July 2025, collateralized by a small subset of ProFrac’s tractor assets.

ProFrac’s B2 is an improvement in the company’s business profile and Moody’s believes that a significant improvement in cash flow generation in 2022 and a recent public offering will reduce ProFrac’s reliance on debt to fund its growth and business. It reflects our expectations. ProFrac is expanding its business through acquisitions. The recently announced acquisition of USWS continues to expand ProFrac’s size, market position and competitive product offerings. The combined company will benefit from a significantly enhanced offering of electric fracturing services and an expanded fleet portfolio in operation. ProFrac will also benefit from a vertically integrated business model with enhanced manufacturing and distribution capabilities and improved execution capabilities. Following the IPO, ProFrac is well positioned to fund its growth through a combination of public equity raising, operating cash flow, and some borrowing. Moody’s expects ProFrac to generate solid operating cash flow in his 2022. ProFrac’s cash flow generation increased faster than Moody’s previously anticipated due to a larger fleet, higher utilization rates and higher fleet prices. The sand business acquisition, manufacturing operations and other cost-cutting measures should improve the company’s cash margins.

The company’s credit quality is tempered by high cyclicality in the oilfield services (OFS) sector. The company’s financial leverage improved slightly in 2021 and is likely to continue to improve in 2022 as earnings increase, but the company’s focus on its largest service line has left it very vulnerable to pressure pump services. It relies entirely on cyclical demand. Hydraulic fracturing services – ProFrac’s single service line – are particularly competitive, dominated by several large companies with more financial resources and greater product and service line diversity than ProFrac.

ProFrac’s stable outlook reflects improved cash flow generation from increased fleet pricing and increased financial flexibility, fueled by its recent initial public offering.

Factors that lead to rating upgrades or downgrades

Factors that could lead to a rating upgrade include significantly improving industry conditions, reducing debt, maintaining good liquidity, and sustained EBITDA growth on conservative financial policies. .

Factors leading to a downgrade include debt/EBITDA above 4x, EBITDA/interest rate below 3x, reduced liquidity, or more aggressive monetary policy.

Headquartered in Willow Park, Texas and wholly owned by ProFrac Holding Corp. (NASDAQ: PFHC), ProFrac is a vertically integrated provider of hydraulic fracturing services to US E&P companies. ProFrac is primarily owned by the Wilkes family.

The primary methodology used in this rating is Oilfield Services, published August 2021,, see our Rating Methodology page. For a copy of this methodology.

Regulatory disclosure

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For affected securities or rated entities that receive direct credit support from the principal entity in this Credit Rating Action and whose ratings may change as a result of this Credit Rating Action, the relevant Regulatory disclosures are disclosures of the assurance entity. Exceptions to this approach exist for the following disclosures, as applicable to the jurisdiction: Ancillary Services, Disclosures to Rated Entities, and Disclosures from Rated Entities.

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The global credit ratings in this Credit Ratings Announcement are issued by one of Moody’s affiliates outside the United Kingdom and are issued by Moody’s Investors Service Limited, One Canada Square, Canary, pursuant to the laws applicable to UK credit rating agencies. Approved by Wharf, London E14 5FA. Further information on the Moody’s Office issuing UK approval status and credit rating is available at:

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Sreedhar Kona
Vice President – Senior Analyst
Corporate Finance Group
Moody’s Investors Service Inc.
250 Greenwich Street
New York, NY 10007
united states of america
Journalist: 1 212 553 0376
Client Service: 1 212 553 1653

peter spear
Associate Managing Director
Corporate Finance Group
Journalist: 1 212 553 0376
Client Service: 1 212 553 1653

Release office:
Moody’s Investors Service Inc.
250 Greenwich Street
New York, NY 10007
united states of america
Journalist: 1 212 553 0376
Client Service: 1 212 553 1653